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April 17, 2014

Pension Insurance: Just a Stairway to Heaven?

Summary:

I wondered whether we all have the same requirements when we retire. Or will we eventually expect a degree of customization?

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My eye was caught recently by a small classified ad in the Miami Herald for a care establishment for the elderly called The Door of Heaven. It’s in Fort Lauderdale, if you don’t believe me. The title is a little presumptious and maybe assumes that everyone staying there has pre-qualified for the next (better) life. Less of a care home, more of a departure lounge, with the background music probably falling somewhere between Andy Williams and Doris Day.

That same evening, one of the major life insurers ran an ad on TV that took a rather more sophisticated (and expensive) approach. The ad talked about the company’s reinvention of its pension products to meet the needs of a changing world. The ad was good brand positioning, even if it didn’t tell me exactly what the company had in mind. But at least they are thinking about the issues.

I wondered whether, at the end of the day, we all have the same requirements when we retire. Or will we eventually expect a degree of customization to meet our particular expectations? The recent unforeseen decision by the UK Government to allow policyholders to withdraw their savings as a lump sum in full or part when they retire would seem to provide some new flexibility.

In the UK, at least, policyholders can now choose to spend their pension savings on a new sports car, a cruise or even a Gibson Les Paul guitar while they are young enough to enjoy it, rather than save it up for future needs. Sounds like it’s worth thinking about, at least.

Ultimately, there are probably limits to the degree of pension options available to us, if not as individuals, then as market segments. Perhaps those customer segments will be based on decade of birth.

It seems to me that those born in the era of “flower power” who save their money for future care might have different expectations than do hellraisers of the Led Zeppelin era. Happiness for retired hippies may involve having flowers in now-greying hair. Fans of Zeppelin may demand their carers to provide them with denim-covered Zimmer frames. Dylan fans in their twilight moments as they pass on to the next world will expect to be serenaded by “Knocking on Heaven’s Door.” And for those whose faculties aren’t what they used to be, perhaps a touch of the Stones’ “I Can’t Get No Satisfaction”….

Personally I’m more of a Who man. When Roger Daltry sang “I hope I die before I get old” in 1965, I don’t suppose he was thinking about the complications of pension schemes. I’m not a fan of old age, but, as they say, it’s better than the alternative.

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About the Author

Tony Boobier is a former worldwide insurance executive at IBM focusing on analytics and is now operating as an independent writer and consultant. He entered the insurance industry 30 years ago. After working for carriers and intermediaries in customer-facing operational roles, he crossed over to the world of technology in 2006.

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